Some retailers on Reddit’s WallStreetBets forum helped sparkle
GameStop
the short parabolic pop of stocks has set its sights on public cannabis companies.
Shares of US Producers
Curaleaf Holdings
(CURLF),
Green Thumb Industries
(GTBIF), and
Cresco Labs
(CRLBF) jumped between 4.5% and 7.5%. Cantor Fitzgerald analyst Pablo Zuanic says Barron’s that Canadian equities have recently outperformed U.S. multistate operators, or MSOs, which may indicate great interest from amateur Robinhood investors. Robinhood does not trade over-the-counter stocks, although other online brokers would like to do so.
Charles Schwab
do.
“We believe that much of this may be due to retail investors deciding to look for GME-type opportunities in cannabis,” he wrote. “MSOs are also less liquid and trade in OTC, while Canadians are listed in US wallets.”
Marijuana shares have been going on for months.
ETFMG Alternative Harvest
(MJ), an exchange-traded fund with exposure to cannabis businesses, has risen in seven of the past eight days, including three consecutive days’ gains that have brought it up 42%. According to Dow Jones Market Data, it is 131% higher so far. That includes a15% pop on Wednesday to $ 33.21 – the highest close since May 2019.
Here are some factors that move pot stock.
Reddit’s hunt for the next big play. The most popular posts on the WallStreetBets forum over the past few weeks have mostly been related to the movements in their favorite shares that were not favorable, namely GameStop (GME). While some reports linked posts on the forum to a movement in silver futures contracts, several high-profile posts pushed back against the story. At the time, GameStop was still the focus.
But not Wednesday. A site that lists shares on the forum found
Solar Growers
was the most popular Wednesday, pushing GameStop to the No. 2 slot. Aphria and Tilray were the third and fourth tik most mentioned.
Roof growth
and
Aurora Cannabis
both just cracked the top-12 most discussed tickers.
Alt-data companies are running services to track stock market sentiment on Reddit forums. The web crawling company Thinknum tells Barron’s last month that its newly launched product that tracks the New York and Nasdaq stock exchanges on the WallStreetBets and Stocks Reddit pages has already attracted interest from dozens of hedge funds. It is quite possible that professionals who followed the forum helped to increase the movements for the above stocks.
A shifting political landscape. The recent rally in cannabis supplies began against the election in 2020. Consent or expansion of legal marijuana was on the ballot in a handful of states, all of which won. President Joe Biden’s victory also helped. Biden said he supports the decriminalization of cannabis.
The run-off of the Georgia Senate in January also started pot supplies. By winning both seats, the Democrats took control of both houses of Congress. With Mitch McConnell, a marijuana critic, now the Senate minority leader, he will have a harder time blocking marijuana legislation.
Obligations of leading legislators. Democratic control over Congress and the White House is one thing. But cannabis legislation must compete with other priorities, such as Covid-19 relief, health care reform and tax increases.
Nevertheless, Senate Majority Leader Chuck Schumer (D., NY) made a joint statement with Democratic Sens. Cory Booker of New Jersey and Ron Wyden of Oregon said they plan to propose “comprehensive cannabis reform legislation.”
Dedicate to Yahoo! He said on Tuesday he thought Republicans were “trying to reconcile some of the views they had long held” with the fact that cannabis is popular with voters. Florida Republican Rep. Matt Gaetz highlighted voter support when he sponsored a marijuana decriminalization bill.
The first American marijuana fair. Green Thumb Industries on Tuesday announced the first U.S. cannabis initial public offering. Although the company still cannot list shares on the New York Stock Exchange or Nasdaq, the Securities and Exchange Commission has effectively declared the listing of Green Thumb. It was a $ 100 million offer that was itself endorsed to a single institutional investor.
Andrew Partheniou, analyst at Stifel GMP, said the announcement “reinforces our thesis on the attractive investment opportunity in the US cannabis industry.”
“Institutional investors seem to be finding ways to access the US cannabis opportunity, despite the fact that US stocks are trading on relatively limited liquidity in the CSE and US OTC markets,” he wrote. “In addition, the perceived risk profile arising from the conflict between federal and state laws, which also diminished the availability of custodians trading in the industry, does not appear to have deterred investors’ enthusiasm.”
Cannabis trade heats up. One of the reasons why Canadian pot supplies stumbled in the year after the introduction of legal sales was a mix of inflated expectations, limited stores and a lot of competition in space. Meanwhile, the largest cannabis company, Curaleaf, in the US has about 8% market share, according to Zuanic.
Such an overcrowded field has led to speculation about consolidation. In December, Aphria and Tilray’s merger announcement took the stage to create the largest company selling marijuana and sending both shares higher. Aphria said earlier this year that it expects the merger to close in the first half of the year. Tilray on Tuesday announced an agreement with Grow Pharma to import and distribute medical pots in the UK.
“As demand continues to rise in the UK, Tilray is well positioned to be a leading supplier of medical cannabis products,” Sascha Mielcarek, managing director of Tilray in Europe, said in a news release. “Regulations are advancing as more and more countries in Europe recognize the benefits of medical cannabis and its potential to improve the quality of life of patients.”
Write to Connor Smith at [email protected]